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BBB file opened: March 12, 2010Business started: 01/07/2009 in UTBusiness started locally: 01/07/2009Business incorporated 01/07/2009 in UT

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How Much Does it Really Cost to Get Out of Debt? Many people will confuse the difference between the Price and the Cost of a particular debt resolution option. You can only make a fair comparison of the various options after you fully understand what makes up the Price and what makes up the Cost of something. You may be thinking, ―But aren‘t they the same thing? They are actually very different and once you understand the difference, you are on your way to saving thousands of dollars when resolving and paying off your debt. The Price of something is only a figure, or a number, to establish relative worth. This is like the sticker Price of a car. The Cost is the actual amount of money you have to take out of your pocket to actually own the product or pay for the service. This is like the total of monthly payments on a car loan versus the purchase Price of the vehicle. For example, let‘s say that the sticker Price of a particular new car is $30,000. After discounts and rebates, the final Price the customer pays is, say $25,000. Add sales tax, license, dealer fees, etc. and the final Price is now $27,000. The customer puts $1,000 down, finances the remaining $26,000 at 9% for 60 months, and drives away thinking he just bought a car for a Price of $27,000 (at least that is what he tells his friends!) We now know the actual final Price - $27,000 – but what was the Cost? The $1,000 down plus 60 payments at $540 ($26,000 principal balance at 9% for 60 payments), equals a total Real Cost of $33,400. The difference between the $27,000 Price and the amount paid of $33,400 is the difference between the Price and the Cost. In other words, the Cost was actually 20% higher than the Price! From that illustration you can see that if you have to pay for something over time, with any sort of interest or charges added, the total amount you have to take out of your pocket to pay for it will always exceed the initial purchase Price. The higher the interest, or the longer the time you have to make payments, the more the Cost will exceed the Price. Now that you better understand the difference between the Price and the Cost of something, we can evaluate the true cost of various debt resolution options. Remember, people want the lowest Cost option, but usually buy what they think is the lowest Price option. As demonstrated earlier, Price should not be the determining factor in making a buying decision – it should instead be the total Real Cost. The Bankruptcy Option Bankruptcy may seem like the only way out of some situations, but you should consider what it will cost you. Sometimes, these costs will lead you to look for another solution. You will need to consider more than just the costs for filing the bankruptcy. You will pay the filing fees and most likely need a lawyer. These filing fees have gone up as part of the Deficit Reduction Act. The filing fees were $200 for a Chapter 7 and $185 for a Chapter 13 filing, and have now gone up to $299 and $273 respectively.

If you make changes to your case or proposals for added actions, you will pay more. And you will have to avoid missing records and writing bad checks to keep from adding to the bill. In general, just filing for bankruptcy can cost you in nine ways: 1. Attorney fees 2. Credit counseling 3. Petition fees 4. Amendment fees 5. Reopening fees 6. Conversion from a Chapter 7 to a Chapter 13 7. Splitting fees 8. Abandonment of property costs 9. Withdrawing the reference fees But you will pay much more than just for those items. For the next decade you will pay higher interest rates on any loans you are able to secure. If you want to buy a home, you will probably have to shop the subprime market, which automatically means higher interest rates. You will also pay higher insurance premiums as insurance companies look to your credit history for the potential of claims by you. The worse your credit, the more likely you are to have a claim and the higher your premiums. You may have to sell your existing home, cars and belongings to settle your debts. You may find that even after your debt obligations are fulfilled and your credit history is on the way to repair, you will still be unable to secure credit from your previous lenders. They keep the information on file for ten years from the time the bankruptcy is discharged, not from when it is filed. Bankruptcy isn't something to be taken lightly. It will cost you a lot of money and lost sleep. If you are able to find a way to avoid it, you should. Under the new law, you will have to attend credit counseling to be able to file for bankruptcy. You will have to pay for this, usually $50 a session. You are not required to have an attorney represent you, but the paperwork can be overwhelming if you are not familiar with all the legal terms and requirements. There can

be a broad range of fees for attorney services, but you can expect to spend at least $500 for competent legal counsel. Generally, the total fees for the filing itself, credit counseling, and attorney fees can run anywhere from $700 to $2,000. If you shop around, you should be able to cover all the costs for about $1,000. But of course just paying the costs does not get you out of debt – not by a long shot. If you are forced into a Chapter 13 filing, you will also have to pay your creditors back for somewhere between 40 and 60 cents on the dollar typically, plus Trustee fees. Bankruptcy is something that is hard to recover from, both emotionally and financially. So look at bankruptcy not as a way to start over, but a long pause in your life. Everything will change. You should try to avoid it. The total Cost of bankruptcy is just too much to be a temporary fix for your problems. The Debt Settlement Option The debt settlement industry is one of the hottest and fastest growing industries in the country right now. So many people are over extended on credit card and other unsecured debt that any solution can seem attractive. But what does it really cost to get out of debt using this option? Virtually all of the ads for this type of service tout savings of 40-60% off your current balance, with most quotes being for 50% plus the fees to the debt settlement company. Although there is some variation on the costs associated with this option, we will use the most common pricing model being sold nationwide. The most typical program calculates repaying the debt for 50% of the original amount, plus a fee of 15% of the total debt. Using this as a starting point, we can do some calculations to determine the true Cost of this option. For example, if you had total credit card debt of $40,000, you would be expected to pay $20,000 to your creditors and $6,000 to the debt settlement company, for a total of $26,000 paid over four years with a monthly payment of about $540. However, there are more fees associated with this option. The first is the monthly account maintenance fee that debt settlement companies charge. The typical fee is $40 per month, which would total another $1,920 in cost over the 48 months of the program. There is one more cost that the debt settlement companies rarely mention, and that is the imputed income tax we discussed earlier. Debt settlement companies negotiate with the primary creditor and they are required to file a 1099-C for any forgiven debt. If you are in the 15% tax bracket, you would owe income taxes on the $20,000 in forgiven debt, or $3,000. Now we can add up the total cost of getting out of debt using this option. The amount to the creditors plus the fees is $26,000, plus the monthly fees of another $1,920, and the

taxes of $3,000 totals $30,920, or 77% of the original debt and would require payments for the next four years. The Debt Consolidation Option Due to dropping real estate values, this option has lost popularity in recent years but is still available as an option to some people. Although the low monthly payments available under this option can appear attractive, don‘t be fooled by this one – it is by far the most expensive option to get out of debt. Since this is a one hundred cents on the dollar option, you would have to borrow $40,000 plus pay closing costs of about $1,200, for a total loan of $41,200 to be paid back at 9.5% interest over the next 15 years. This option would have a monthly payment of about $431, but it would last for a full 15 years, or 180 payments. The total amount paid back would be the $41,200 principal plus interest of $36,240 for a total amount of $77,440, or 194% of the original debt! But wait. What about the interest deduction on the home equity loan? Based on a total interest payment of $36,240 and again assuming a 15% federal tax bracket, you would save a total of about $5,436 in taxes over the 15 years. Even if we subtract this amount from the total paid you would still end up paying $72,004 back on $40,000 in credit card debt – not a very good deal at all. The Credit Counseling Option This is another popular, and expensive, option to get out of debt. Basically there is no attempt made to reduce the principal balance, only to negotiate more favorable interest rates and perhaps lower minimum payments. The typical program takes 60 months to get out of debt and you will end up paying back more than the total current debt. Using our earlier figure of $40,000 in credit card debt paying 18% interest and making payments of $1,200 a month we can see how the costs come out under a credit counseling program. You could possibly get the interest rate reduced to an average of 10% and set up a payment plan for 60 months. Using a credit card debt calculator we can determine that you would now be paying $850 a month and a total interest of $10,993. The total of payments and interest then would be $50,993 to be debt free in five years. Asset Protection and Debt Resolution The final option we will review when considering the true Cost to get out of debt is asset protection and debt resolution. There are variables that determine the actual cost of this option but we will use the following assumptions: You are current on your credit card debt; have some available credit left on your cards; can afford to make small monthly payments; and live in a state where wages can be garnished. Using the same $40,000 in current debt from our earlier examples, we can determine that this is by far the lowest cost option, and the quickest, to get out of debt. It will also have

the least long-term impact on your credit scores. At this debt level, the total cost to get out of debt, including the fee for the program, for a couple is less than 40 cents on the dollar. And the best part is, the entire program can be completed in about 18 months – faster than any other option available. Because of the leverage this type of program provides, you can expect to negotiate and pay off your debts for around 20 cents on the dollar and the balance will be in program fees. Asset Protection and Debt Resolution would allow you to hold your creditors at bay while you accumulate enough funds to pay your creditors off at a substantial discount. You should expect to spend a total of around $15,000 to become debt free using this process – a fraction of the cost of any other option we have discussed.

Debt validation

This article is about debt validation under the Fair DebtCollection Act. For debt validation under the Fair CreditBilling Act, see Fair Credit Billing Act.

Debt Validation, or “debt verification”, refers to aconsumer's right to challenge a debt and/or receive writ-ten verification of a debt from a debt collector. The rightto dispute the debt and receive validation are part of theconsumer’s rights under the United States Federal FairDebt Collection Practices Act (FDCPA) and are set outin §809 of that act, which has been codified in Title 15,Section 1692-1692p of the United States Code.[1] Thisdebt validation procedure was expected to reduce the in-cidence of debt collectors dunning the wrong person orattempting to collect previously paid debts.[2]

1 Persons or entities considereddebt collectors

Under the Fair Debt Collection Practices Act, any per-son or entity, including lawyers, who regularly attemptsto collect consumer debts is considered a debt collector[3]and is therefore required to respond to proper debt val-idation requests. In contrast, the original creditor andits employees are generally not subject to the FDCPA,though they may be regulated by other state and federallaws; including the Fair Credit Reporting Act, which wasmodified by the Fair and Accurate Credit TransactionsAct in 2003. The original Act excluded lawyers fromthe definition of “debt collector” by explicitly exemptingfrom any coverage “any attorney-at-law collecting a debtas an attorney on behalf of and in the name of a client.”The definition of “debt collector” was amended in 1986to omit the prior exemption for attorneys.[4] Despite theamendment, some attorneys maintained that litigation inan attempt to collect a debt did not bring them within thedefinition of “debt collector” in 15 U.S.C. § 1692a(6).This issue was not resolved until 1995, when the SupremeCourt determined that the FDCPA applies to any attor-neys who regularly engage in debt collection activity, evenif it includes litigation.[5]

2 Time limits for disputing a debtor requesting validation

A consumer can dispute all or any part of a debt at anytime, but only a written request sent within thirty days ofreceipt of the first written notice of the debt triggers vali-dation rights under the FDCPA. 15 U.S.C. § 1692g(a) re-quires specific information regarding the consumer’s rightto dispute all or part of the debt to be provided in writingto the consumer within 5 days of the initial communi-cation. 15 U.S.C. § 1692g(b) specifies the response re-quired of a debt collector upon receipt of a timely writtenor oral dispute, most notably that it shall cease collectionof the debt until the collector mails the consumer “verifi-cation of the debt or a copy of a judgment, or the nameand address of the original creditor, and a copy of suchverification or judgment, or name and address of the orig-inal creditor.” Thus, there is no time limit for providingthe required verification or other information, just thatthe collector must cease collection until it provides the re-quired information. 15 U.S.C. § 1692g(b) also contains aprohibition against the collection activities and commu-nications during the initial 30 days of contact with theconsumer overshadowing or being inconsistent with theconsumer’s right to dispute the debt or request the nameand address of the original. 15 U.S.C. § 1692g(c) pro-vides that failure by the consumer to dispute the debt dur-ing the thirty day period after the debt collector’s initialcommunication with the consumer may not be construedby any court as an admission by the consumer that he isliable for the debt.

3 Difficulty in defining what consti-tutes debt validation

The FDCPA does not define what constitutes proper debtvalidation, and the issue has not been fully resolved bythe courts. In the leading case of Chaudhry v. Gallerizzo,the Fourth Circuit Court of Appeals adopted a relativelylow standard: “Verification of a debt involves nothingmore than the debt collector confirming in writing that theamount being demanded is what the creditor is claimingis owed; the debt collector is not required to keep detailedfiles of the alleged debt.”[6] The Court further stated thata request for validation of the debt is primarily intendedto eliminate such problems as collectors contacting thewrong person or attempting to collect debts which have

1

2 7 EXTERNAL LINKS

already been paid.[6] In 2006, the Ninth Circuit Court ofAppeals followed and adopted what they described as the“reasonable standard” articulated in Chaudhry.[7]

Consumer advocates have criticized the Chaudhry andClark cases as setting too low a legal standard for vali-dation and allowing debt collectors to justify providinglittle information in response to a dispute.[8] In addition,some courts (such as the Court of Appeals of Indiana[9])have taken a stricter stance on debt validation than theChuadhry Court, though the precedential value of suchcases is uncertain.

4 Consequences of debt collectornot responding

There is no deadline for the debt collector to provide aresponse to the request for validation. However, a debtcollector must cease all attempts to collect the debt untilthey have sent a sufficient response.[1]

If a consumer makes a timely request for debt validationand a debt collector fails to provide proper validation ordoes not respond at all, the debt collector may not legallycontinue to pursue the debt. If collection activity contin-ues, the consumer may file a lawsuit in state or federalcourt for violation of the FDCPA (see Fair Debt Collec-tion Practices Act for discussion of FDCPA lawsuits).[10]

Any dispute of the debt must also be reported by the cred-itor on the consumer’s credit report pursuant to the FairCredit Reporting Act (FCRA).

5 See also• FDCPA

• Fair Credit Reporting Act

• Adverse Credit History

• Credit card

• Credit rating agency

• Credit history

6 References[1] 15 U.S.C. § 1692g

[2] J Tavormina (1978), The Fair Debt Collection PracticesAct--The Consumer’s Answer to Abusive Collection Prac-tices, Tul. L. Rev.

[3] 15 U.S.C. § 1692a(6)

[4] Knight, Chad M. (1996–1997), Attorney Liability underthe Fair Debt Collection Practices Act 85, Ky. L.J., p. 463

[5] Heinz v. Jenkins, 514 U.S. 291, 115 S.Ct. 1489, 131L.Ed. 2d. 395 (1995)

[6] Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir. 1999).

[7] Clark v. Capital Credit & Collection Servs., 460 F.3d 1162(9th Cir. 2006).

[8] “Ninth and Fourth Circuit Decisions May Diminish Con-sumer Debt Dispute Rights”. NCLC Reports. NationalConsumer Law Center. November–December 2006.Archived from the original on 2007-02-03. Retrieved2007-02-26.

[9] Spears v. Brennan, 745 N.E.2d 862 (Ind.App. 2001).

[10] 15 U.S.C. § 1692k

7 External links• Fair Debt Collection Practices Act - United StatesFederal Trade Commission

• FTC’s FDCPA Web Page

• Mymoney.gov, U.S. Financial Literacy and Educa-tion Commission

1 - How does this program work?

It separates your personal debt liability from your cash and property. In other words, no matter how much debt everyone says you have, none of your creditors will be able to sue and take your cash or property after you’ve completed the Asset Guard program. Multiple debts, civil liability, administrative enforcement, collection letter, and other related topics are also part of this all-inclusive program that will help anyone deal with their credit card debt issues. 2 - How long does it take to complete your program? 90 days if you follow our instructions and do what the system teaches you to do. This is the Average time it has taken based on previous client experience. There are always potential blocks that one may encounter that may slow this up depending on your current status and many other factors but the bottom line is this is the goal and this is the average time it takes when all things work as they should. We can only guarantee our program when it is followed precisely as laid out otherwise it could take longer. 3 - What guarantees do you provide? Unlike any attorney or other debt service company, we’re the only organization in this business that guarantees you will not suffer any loss of wages, income or property due to your unsecured debts. Please request the actual “Terms of Service” from your Program Consultant. 4 - Do you guarantee that I will not be sued? No, however we do guarantee that IF you are sued, you will not need to hire an attorney to defend yourself or appear in court in your own defense. Also, we guarantee that IF a creditor sues you and obtains a judgment against you, they will be unable to take any of your money or your property. 5 - How quickly can I get this program in place? Within hours or a few days or a few weeks, depending on the option you choose, you can have all of the protections guaranteed except against wage garnishment. The protections against wage garnishment usually take three to six months to activate. 6 - Can you help with student loans? Yes, this program can protect you against the collections from DOE guaranteed student loans with the only exception being that just like the IRS; they could garnish your paycheck. While our program can diminish this risk, it cannot eliminate it. Other creditors will not be able to garnish your wages (as previously mentioned). 7 - Can you help with tax collections? Yes, this program can protect you against tax collections with the only exception being that just like the guaranteed student loans; they could garnish your paycheck. While our program can diminish this risk, it cannot eliminate it. Other creditors will not be able to garnish your wages (as previously mentioned). (NOTE: We do not engage in offering tax advice only those things that you will need to protect yourself.) 8 - Can you help with utility accounts and unpaid phone bills? Yes, these are treated the same as credit card accounts with the same guarantees. 9 - Can you help with doctor/medical bills? Yes, these are treated the same as any other unsecured credit accounts with the same guarantees.

10 - Can you help me avoid the repossession of my car if I am behind on that payment? No, but our program guarantees that when the creditor takes your car and sells it, they will not be able to collect any money from the unsecured balance (that they demand you pay) usually associated with a repossession and auction of a car. There are also other methods to help you prolong or keep the possession or your car that we may help you employ but there are still risks associated. Ask a consultant for details. 11 - Can you help stop a foreclosure? Yes, and we guarantee to cause certain delays, typically two years in judicial foreclosure states and approximately one year in trust deed states. In How To Dismiss a Mortgage Foreclosure eBook, we have reproduced and edited some chapters to help guide those who need to cancel mortgages and other secured debts such as auto and student loans. However, if you want us to stop your foreclosure and do a loan modification additional costs and fees may be charged by our company. 12 - Can you help stop the sale of my house if it is imminent, possibly in the next week or so? It is likely that our process can delay the sale using bankruptcy, our program may be able to “turn back the clock” and provide the delay you need. 13 - What if I have business debt from a sole proprietorship, an LLC, a S-Corporation or a C-Corporation? We can help you with these types of debts. The program makes the least amount of changes to your existing business organization while providing you with absolute protection from creditors. And, the same guarantees apply. 14 - Can your system tell me how to stop or answer debt collection calls? Yes, in fact we freely provide a three page set of instructions with three proven methods of stopping collection calls 99% of the time. Just ask your financial consultant to provide you with document. 15 - What if I start the program and then decide to file bankruptcy? Bankruptcy is very expensive and it has a much more negative impact on your credit report. You will realize that bankruptcy would never make sense after you learn our strategies. 16 - Can you help me if I already have a judgment? Yes. We have specific proven strategies that, even though a creditor already has a judgment against you, will make the judgment uncollectible or worthless to the unfriendly creditor. 17 - Can you help me if I already have a wage garnishment? Yes. In many cases we can stop the garnishment with a one page form filed in the court. And if not, we can stop it and then prevent it from recurring. 18 - If I am the plaintiff in a lawsuit or the beneficiary or recipient of cash flow from a judgment lien or mortgage lien, can your system protect my cash flow? Yes. 19 - What if I am not earning wages but am self-employed? Can your system protect my self-employment income? Yes. We guarantee that too.

20 - Does your program create any new tax consequences for me? No. Absolutely not! In fact, once the program is in place, you’ll want to have a discussion with your accountant to learn how you can obtain greater tax benefits. 21 - Does your program show me new ways to increase my income? Yes, you’ll discover a list of new methods of obtaining financing for a business venture and basic strategies to earn more money without getting another job or using up your savings. 22 - What are the other costs associated with using your program? You will pay the least expensive filing fee for establishing a corporation. And the method we show you allows you to create as many corporations as you want or need. You’ll only pay one small fee every year to the Registered Agent to keep the corporation in good standing. Right now that is $100. The only other additional costs would be several one-time filing fees in your local court, usually totaling around $150 but this is only for our most advanced asset protection strategies. In California, it might be closer to $400. Remember these are one time fees; whereas without our program, you would be paying untold court fees and even attorney fees. 23 - How do I know this program is for me? If you can be sued in the next fifty years, this program will make you immune from any lawsuit. It will help prevent you from paying any legal fees to an attorney to defend yourself since you will have no personal risk. If you can suffer a wage garnishment, now or in the future, or suffer the loss of property because it is not managed through the appropriate ownership, this program will prevent you from being subjected to those risks. If you pass away, your surviving family members or heirs may want these benefits. 24 - How did you discover these methods or develop them? We spent weeks at a time sitting through hearings in many courtrooms across the country taking notes and reading actual case files from the major creditors and law firms. Then we “reverse engineered” the collection process to benefit you. Also, we subscribe to debt collection trade journals, and we are certified as judgment enforcement officers, so we know what they know including but not limited to what software they use and their in-office collection practices. We know what to tell them so they’ll remove your account from the automatic rotation so they won’t call you anymore. If all that is not enough, we have personal first-hand experience in each of the strategies from the anti-debt collection process of our own accounts. 25 - Does anyone else offer the same program? No. The only other services that are alternatives to this program include bankruptcy, settlement, consolidation or counseling. However, there are individuals who may be selling similar information as us and these people are not credible and many of them have plagiarized segments of our material and they don’t have expertise, or first-hand experience in this arena. 26 - I found some other companies making similar offers; do they have the same program? Chances are that these are former customers or former sales agents who are selling plagiarized versions of our program. They don’t have any programs and they’re just making a similar offer and taking people’s money without providing a valid service. Some of our customers who bought into these scams were frustrated by the lack of expertise and customer service that they didn’t receive from the other companies. We’re the original

company providing the service. Unfortunately, sometimes people end up paying more money to perpetrators before they find what they really need to solve their problem. 27 - Have any customers been dissatisfied with the program? Yes, we’ve been doing this for over 15 years and it’s inevitable that some people buy the program, possibly try it and then decide it’s not for them. It’s just like any product or service. However, after interviewing these people who were dissatisfied we discovered that they were unwilling to change their habits and they weren’t motivated to improve their financial situation. 28 - Has your company ever been investigated for alleged crimes or fraud? No, but we’ve been investigated by several state bar organizations to determine if we were competing with their member attorneys. No formal investigations have ever been opened, and all letters of inquiry were answered timely and appropriately. 29 - Why aren’t you listed with the Better Business Bureau? Yes, however, we believe it’s disingenuous and it misrepresents the real status of our company because anyone who pays $500 a year can have a good record with the BBB. Furthermore, any complaints filed against our company are published through the local BBB whether we are or aren’t a member. Many people who are selling debt elimination scams and have these types of complaints simply change their name and open a new BBB account and post the new logo on their website. We choose not to participate in that deception. Instead, we provide a money back guarantee and our testimonials and references. 30 - What is the financial status of your company? We’ve been a debt free company since 2005 and we’ve always operated paperless and environmentally friendly (green) offices. Our business would continue to exist even in the worst natural disasters and we’ve taken every measure to establish continuity measures so that you’ll always receive the service you need to satisfy your original goals. 31 - What if I have questions after receiving your program? Your membership includes unlimited support by our professional consultants. You will be assigned a log in password for our membership site giving you full access to live chat and our help desk which is the only way for us to track your progress, it essential to your success that you take advantage of this as it is included with this system. 32 - Do I need an attorney for this program? No, never. However, we have trained over 80 law firms and attorneys on how to help their clients by using this program. 33 - What types of payment do you accept? All types of payments, however you should know we prefer to accept checks by fax or online payment methods.

34 - Why haven’t I heard of your program before? The market is enormous! There are approximately 176 million credit card users. Most of them do not have a need for this service, and those that do only know branded terms such as “bankruptcy” or “settlement”. We have helped over 80,000 people but that is only a very small percentage of the market. We place advertising in nearly every media outlet available, from short commercials, infomercials, radio, print media including newspapers and magazines, billboards and direct mail.  

DEBT VALIDATION –

MYTH, MYSTERY OR MIND TRAP

A presentation of Senior Outreach Ministries 2006© All Rights Reserved http://www.senior2senior.org

Disclaimer: The material in this ebook is for information and educational purposes

only. It is not intended to replace professional legal, medical or accounting advice.

Any reliance on this material by the reader is done so at his/her own discretion.

Although this material was researched from presumably reliable sources such as the

US government, the reader remains responsible to perform their own due diligence.

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The estimates of the amount of debt carried by Americans ranges from about $2000 per adult to $8000 per adult and this is just on their credit cards. When you add in house, car, boat, motorcycle and RV payments on top of everyday household expenses like groceries, insurance, vacations, appliance and environmental home system repairs along with a myriad of other obligations, you can see why debt is more than a 4 letter word. This ebook does not purport to be a get out of debt plan, a credit repair plan, tell your creditor to shove it plan or any other scheme in those channels. Rather, it is an ebook that covers only one topic: Debt Validation and it covers it the way I see debt validation as it exists today. In other words, since I believe I’ve done my homework, I’m sharing my opinion of what I think I learned. Debt Validation comes into existence only at the time a person receives a letter from a debt collector stating something to the effect they are attempting to collect a debt for XYZ, Co. in the amount of $BBBBB.CC. They tell you in the letter unless you dispute this thing they are saying is a debt within 30 days, it will be presumed you owe it. There are two ways to react to this letter. One, answer it. Two, ignore it. Number two is not a good idea for a myriad of reasons the least of which is you actually may not owe the debt. You see, debt collectors have been criminally prosecuted for telling someone they owe a debt when in fact the person did not owe the debt. You can google a ton of stories about such happenings so I won’t say anymore here. You also may not owe as much as they claim. Another debt collector trick which has cost them quite a few dollars after the court suit was settled in the alleged debtor’s favor. When you google for the above information, I feel certain you’ll read about this fax paus as well. To understand the composition of the letter from the collector you should understand the law behind it. The law that sets the parameters is the Fair Debt Collection Practices Act (FDCPA). It states, for example, the collector must tell the alleged debtor that they are attempting to collect a debt. Sidebar: I once had a debt collector state in their letter they were just writing a letter for a friend who happened to be a client and they didn’t include the required wording about attempting to collect a debt. I never heard from them again after I wrote and highlighted the violations of the FDCPA they had committed. Oh that all such collectors could be disposed of so easily. Please become familiar with the FDCPA as it could become your newest best friend. Section 1692g of the FDCPA is the paragraph addressing debt validation. It is titled: Validation of Debt. This is important because validation and verification are not the same

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thing in the eyes of the law. The law is codified in Title 15 of the United States Codes beginning in section 1692. Use any search engine to find this Title. Verification, although used in the Code, is not as requiring as validation. If you care to research this point, start with a good law dictionary then move into the court cases. Unless you want to fall asleep, I’d wait until I was contacted by an over aggressive debt collector. Here is the applicable section as printed in the Codes:

Sec. 1692g. Validation of debts

(a) Notice of debt; contents

Within five days after the initial communication with a consumer in

connection with the collection of any debt, a debt collector shall,

unless the following information is contained in the initial

communication or the consumer has paid the debt, send the consumer a

written notice containing -

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days

after receipt of the notice, disputes the validity of the debt,

or any portion thereof, the debt will be assumed to be valid by

the debt collector;

(4) a statement that if the consumer notifies the debt

collector in writing within the thirty-day period that the debt,

or any portion thereof, is disputed, the debt collector will

obtain verification of the debt or a copy of a judgment against

the consumer and a copy of such verification or judgment will be

mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request

within the thirty-day period, the debt collector will provide the

consumer with the name and address of the original creditor, if

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different from the current creditor.

(b) Disputed debts

If the consumer notifies the debt collector in writing within the

thirty-day period described in subsection (a) of this section that

the debt, or any portion thereof, is disputed, or that the consumer

requests the name and address of the original creditor, the debt

collector shall cease collection of the debt, or any disputed

portion thereof, until the debt collector obtains verification of

the debt or a copy of a judgment, or the name and address of the

original creditor, and a copy of such verification or judgment, or

name and address of the original creditor, is mailed to the

consumer by the debt collector.

(c) Admission of liability

The failure of a consumer to dispute the validity of a debt under

this section may not be construed by any court as an admission of

liability by the consumer.

Notice the thirty day requirement in the Code? They must give you 30

days to request a validation. Also, look at subsection (c) right above

this paragraph.

Should you fail to dispute the validity of a debt, no court is allowed

to construe your failure as an admission of liability. This is a very

powerful subsection because you no longer are liable simply because you

did not dispute the validity of the debt at the onset.

You may not have done so for any number of reasons. You, in fact, may

have wanted your day in court without the encumbrance of a stack of

paperwork or you may wanted to short circuit the time the dispute would

normally take if you entered into a letter writing campaign.

All of that is now moot per the law. That’s a good thing.

Now the question is reduced to what is this animal called validation

you want from the debt collector? No part of this section clearly

defines validation yet it lays the requirement for such an action

squarely on the shoulders of the debt collector.

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Debt collectors will take the verification route and use computer print

outs or copies of paper work you allegedly signed years ago or copies

of microfiche documents or a letter supposedly from somebody in the

credit department of the original creditor. If the debt has been

reassigned or sold several times, the new debt collector uses the

collection letter the former collector sent you.

As you can imagine, most consumers do not accept this slight of hand as

validation. They want their original contract or the other document(s)

alleging a debt be brought forward that has their signature on it.

On this point, unfortunately, the courts seem to be ruling that a

computer print out from the creditor alleging a debt is sufficient as

validation. And, unfortunately one more time, the Federal Rules of

Evidence (FRE), sections 1002, 1003 and 1004 are allowing the courts to

rule this way.

Here are the rules, along with their Notes, as they appear in the FRE.

Rule 1002. Requirement of Original

To prove the content of a writing, recording, or photograph, the original writing, recording, or photograph is required, except as otherwise provided in these rules or by Act of Congress.

Notes on Rule 1002: Notes of Advisory Committee on Rules.

The rule is the familiar one requiring production of the original of a document to prove its contents, expanded to include writings, recordings, and photographs, as defined in Rule 1001(1) and (2), supra.

Application of the rule requires a resolution of the question whether contents are sought to be proved. Thus an event may be proved by nondocumentary evidence, even though a written record of it was made. If, however, the event is sought to be proved by the written record, the rule applies. For example, payment may be proved without producing the written receipt which was given. Earnings may be proved without producing books of account in which they are entered. McCormick § 198; 4 Wigmore § 1245. Nor does the rule apply to testimony that books or records have been examined and found not to contain any reference to a designated matter.

The assumption should not be made that the rule will come into operation on every occasion when use is made of a photograph in evidence. On the contrary, the rule will seldom apply to ordinary photographs. In most instances a party wishes to introduce the item and the question raised is the propriety of receiving it in evidence. Cases in which an offer is made of the testimony of a witness as to what he saw in a photograph or motion picture, without producing the same, are most unusual. The usual course is for a witness on the stand to identify the photograph or motion picture as a correct representation of events which he saw or of a scene with which he is familiar. In fact he adopts the picture as his testimony, or, in common parlance, uses the picture to illustrate his testimony. Under these circumstances, no effort is made to

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prove the contents of the picture, and the rule is inapplicable. Paradis, The Celluloid Witness, 37 U.Colo.L. Rev. 235, 249-251 (1965).

On occasion, however, situations arise in which contents are sought to be proved. Copyright, defamation, and invasion of privacy by photograph or motion picture falls in this category. Similarly as to situations in which the picture is offered as having independent probative value, e.g. automatic photograph of bank robber. See People v. Doggett, 83 Cal.App.2d 405, 188 P.2d 792 (1948) photograph of defendants engaged in indecent act; Mouser and Philbin, Photographic Evidence-Is There a Recognized Basis for Admissibility? 8 Hastings L.J. 310 (1957). The most commonly encountered of this latter group is of course, the X-ray, with substantial authority calling for production of the original. Daniels v. Iowa City, 191 Iowa 811, 183 N.W. 415 (1921); Cellamare v. Third Acc. Transit Corp., 273 App.Div. 260, 77 N.Y.S.2d 91 (1948); Patrick & Tilman v. Matkin, 154 Okl. 232, 7 P.2d 414 (1932); Mendoza v. Rivera, 78 P.R.R. 569 (1955).

It should be noted, however, that Rule 703, supra, allows an expert to give an opinion based on matters not in evidence, and the present rule must be read as being limited accordingly in its application. Hospital records which may be admitted as business records under Rule 803(6) commonly contain reports interpreting X-rays by the staff radiologist, who qualifies as an expert, and these reports need not be excluded from the records by the instant rule.

Rule 1003. Admissibility of Duplicates

A duplicate is admissible to the same extent as an original unless (1) a genuine question is raised as to the authenticity of the original or (2) in the circumstances it would be unfair to admit the duplicate in lieu of the original.

Notes on Rule 1003: Notes of Advisory Committee on Rules.

When the only concern is with getting the words or other contents before the court with accuracy and precision, then a counterpart serves equally as well as the original, if the counterpart is the product of a method which insures accuracy and genuineness. By definition in Rule 1001(4), supra, a "duplicate" possesses this character.

Therefore, if no genuine issue exists as to authenticity and no other reason exists for requiring the original, a duplicate is admissible under the rule. This position finds support in the decisions, Myrick v. United States, 332 F.2d 279 (5th Cir. 1964), no error in admitting photostatic copies of checks instead of original microfilm in absence of suggestion to trial judge that photostats were incorrect; Johns v. United States, 323 F.2d 421 (5th Cir. 1963), not error to admit concededly accurate tape recording made from original wire recording; Sauget v. Johnston, 315 F.2d 816 (9th Cir. 1963), not error to admit copy of agreement when opponent had original and did not on appeal claim any discrepancy. Other reasons for requiring the original may be

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present when only a part of the original is reproduced and the remainder is needed for cross-examination or may disclose matters qualifying the part offered or otherwise useful to the opposing party. United States v. Alexander, 326 F.2d 736 (4th Cir. 1964). And see Toho Bussan Kaisha, Ltd. v. American President Lines, Ltd., 265 F.2d 418, 76 A.L.R.2d 1344 (2d Cir. 1959).

Notes of Committee on the Judiciary, House Report No. 93-650.

The Committee approved this Rule in the form submitted by the Court, with the expectation that the courts would be liberal in deciding that a "genuine question is raised as to the authenticity of the original."

Rule 1004. Admissibility of Other Evidence of Contents

The original is not required, and other evidence of the contents of a writing, recording, or photograph is admissible if--

(1) Originals lost or destroyed. All originals are lost or have been destroyed, unless the proponent lost or destroyed them in bad faith; or

(2) Original not obtainable. No original can be obtained by any available judicial process or procedure; or

(3) Original in possession of opponent. At a time when an original was under the control of the party against whom offered, that party was put on notice, by the pleadings or otherwise, that the contents would be a subject of proof at the hearing, and that party does not produce the original at the hearing; or

(4) Collateral matters. The writing, recording, or photograph is not closely related to a controlling issue.

Notes on Rule 1004: Notes of Advisory Committee on Rules.

Basically the rule requiring the production of the original as proof of contents has developed as a rule of preference: if failure to produce the original is satisfactory explained, secondary evidence is admissible. The instant rule specifies the circumstances under which production of the original is excused.

The rule recognizes no "degrees" of secondary evidence. While strict logic might call for extending the principle of preference beyond simply preferring the original, the formulation of a hierarchy of preferences and a procedure for making it effective is believed to involve unwarranted complexities. Most, if not all, that would be accomplished by an extended scheme of preferences will, in any event, be achieved through the normal motivation of a party to present the most convincing evidence

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possible and the arguments and procedures available to his opponent if he does not. Compare McCormick § 207.

Paragraph (1). Loss or destruction of the original unless due to bad faith of the proponent, is a satisfactory explanation of nonproduction. McCormick § 201.

Paragraph (2). When the original is in the possession of a third person, inability to procure it from him by resort to process or other judicial procedure is sufficient explanation of nonproduction. Judicial procedure includes subpoena duces tecum as an incident to the taking of a deposition in another jurisdiction. No further showing is required. See McCormick § 202.

Paragraph (3). A party who has an original in his control has no need for the protection of the rule if put on notice that proof of contents will be made. He can ward off secondary evidence by offering the original. The notice procedure here provided is not to be confused with orders to produce or other discovery procedures, as the purpose of the procedure under this rule is to afford the opposite party an opportunity to produce the original, not to compel him to do so. McCormick § 203.

Paragraph (4). While difficult to define with precision, situations arise in which no good purpose is served by production of the original. Examples are the newspaper in an action for the price of publishing defendant's advertisement, Foster-Holcomb Investment Co. v. Little Rock Publishing Co., 151 Ark. 449, 236 S.W. 597 (1922), and the streetcar transfer of plaintiff claiming status as a passenger, Chicago City Ry. Co. v. Carroll, 206 Ill. 318, 68 N.E. 1087 (1903). Numerous cases are collected in McCormick § 200, p. 412, n. 1.

Notes of Committee on the Judiciary, House Report No. 93-650.

The Committee approved Rule 1004(1) in the form submitted to Congress. However, the Committee intends that loss or destruction of an original by another person at the instigation of the proponent should be considered as tantamount to loss or destruction in bad faith by the proponent himself.

Notes of Advisory Committee on 1987 amendments to Rules.

The amendments are technical. No substantive change is intended.

You can find this information simply by going to your nearest law library and opening a copy of the Federal Rules of Evidence to Rule 1002. By the way, some people say the above rules are located in the Federal Rules of Civil Procedure. This is simply not so as the FRCP are numbered 1 through 86 and never even touch numbering into 100 and above let alone 1000 and above. Regardless, now that you know where to find the applicable rules and have their accompanying notes, you are better armed to phrase your argument. The notes are

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extremely important because they add clarification to the rule itself. Always look for notes or annotations to any statute or code section you are researching. They not only clarify but lay out, in some cases, the thought processes of the law makers. You have a right to demand the original as you can plainly read. However, for one reason or another, the debt collector can weasel out of producing the original. I believe the weasel clauses were allowed in the rules because of income taxes. The IRS puts all kinds of entries into your Master File but never produces the original document authorizing them to make any of the entries. Having been down that road with this bunch of brigands, I can state flatly the court is never on the taxpayer’s side. It always allows the IRS to use a dummied up, at least in my case, computer printout as validation/verification of taxes owed. This ebook is also not about the IRS but I reserve the right to inject my opinion about the genesis of why the original doesn’t have to be produced. I have researched many college treatises as well as having read many books in this area and I can only come to the conclusion that the leeway allowed the IRS has spilled over into the credit arena. For me, this is a truly sad day. Others have adeptly written about certain cases decided in the validation argument and have said the courts either didn’t address the issue of the original or agreed with the debt collector that verification/validation is completed with the presentation of a computer print out or a copy of a supposed contract. It is immaterial what the courts said or didn’t say because the governing doctrine is laid out in the already quoted sections of the Federal Rules of Evidence. Believe me, all states have adopted the FRE in one manner or another. Why? Because it is a well laid out schematic easily adaptable to local rules and customs. Its ease of construction is hard to argue with. Therefore, at least in my opinion, you stand a better chance of beating the debt collector by scrutinizing their legal responsibility to follow the procedures. For example, lawyers can be debt collectors and you would think they’d be the first to follow the procedures to a T, right? Wrong! Not only do they have to follow federal procedures, they must comply with state procedures. If you live in Nevada like I do and a debt collecting lawyer sends you one of those “I am attempting to collect a debt letter” and she is not licensed to practice law in the State of Nevada, she may have to be licensed as a collection agency. Also, the form letter she mailed you must have been approved by the State. If neither of these requirements are met, you win on procedures. That’s a good thing.

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A debt collector may not have reported you to any credit bureau prior to resolution of your dispute. This is a common occurrence causing untold grief for alleged debtors. OK, at the beginning of this ebook I did say this book’s focus is strictly validation and I’ve gone astray. Not much, but enough to have to stop myself. I have a Request For Validation letter I send to all debt collectors in which I ask certain questions. These questions set the stage for a law suit should the process go that far. I do not give this letter away as it has material I haven’t seen anywhere else. I am not saying it is bullet proof simply because I don’t know how a judge will rule in any presented set of circumstances. But, I do know, this letter does a beautiful job of protecting my interests and intertwining the FRE and local statutes into the matter. It also allows me to sue in the easiest and least expensive court in any state – Small Claims Court. The highest amount I could sue for in Nevada is $5000.00. However, if I believe I have more than $5000.00 in damages, I will file suit in Federal District Court. I think my letter pinpoints the sections in both the Federal and State Statutes the debt collector will have violated. Therefore, I believe I will win on the procedures, that is, violations thereof. Procedures they, and not me, must follow since the law specifically lays the procedural requirement smack on their door step. There you have it. My take on Debt Validation and an alternative way to at least counter sue the debt collector. I can be reached at tom@senior2senior.org with questions, comments or critiques.